Earlier this week, I forgot to cancel a limit trade and bought twice as much Tesla (TSLA) as intended. That was right around the time of the Cybertruck fiasco, so I was worried it might take me a while to unload the shares. Not so. Right now Google (GOOG), Microsoft (MSFT), and Meta (META) are the odd ones out as Wall Street reshuffles in anticipation of a colder and more austere 2024.
I closed out the position with a whopping $3.66 profit, and felt just fine about that.
But it did inspire me to take another look at one of my favorite charts of all time: the differential between investing in TSLA on September 15, 2014 and investing in Bitcoin (BTC) on the very same day—Bitcoin was never formally “listed,” but that’s as far as Yahoo’s charts go for the coin go back.
If you had bought $1000 of Tesla stock, you would have made a 1281% return. Not too shabby, eh? Meanwhile, if you had bought the same amount in Bitcoin, you would have gotten almost 10X the return — a whopping $10,690%.
What would that have gotten you in actual cash? Compare $13,755 from Tesla stock with $113,000 in Bitcoin (in other words, enough to actually buy a Tesla).
Most of the Bitcoin speculators did not buy flashy cars, however. Instead, they stayed at home and quarantined during the pandemic, congregated on Reddit, took their proceeds and used them to buy “meme stocks,” using social media to drive up prices for consumer brands like GameStop (GME) and AMC Theaters (AMC).
Apple stock, by comparison delivered a “measly” 666% return over the same time period. But Apple shareholders got dividends.
There has been a lot of talk about Berkshire Hathaway since Charlie Munger’s passing last week. But the headline that grabbed my attention is the sheer volume of dividend income that Warren Buffett’s company is expected to collect—more than $6 billion.
Buffett is the undisputed master of value investing, and his approach has weathered inflation crises, not to mention the Vietnam War. I saw him speak in the early 2000s, at a Socially Responsible Investing conference in Charlotte, North Carolina.
My impression was overwhelmingly positive, but this is the remark from Warren Buffett’s keynote speech that stuck with me the most:
“At the end of your life, success is judged by the number of people who love you.”
Ok, that’s fair. Except how well do those people who love you actually know you? How often do you see them and spend time with them? Like nearly everything that can be said about the global financial market as a whole, this observation is both profound and extremely open to debate.
It’s also a prime example of quantitative versus qualitative analysis.
Bitcoin and gold are quietly going through the roof again. I think the only people who believe that inflation is truly under control are the ones who listen to Jerome Powell’s press conferences live.
The invention of proof-of-work mining was a one-time event. Never before and never since will it be as easy to see exponential growth rates simply by clicking the “trade” button on an online exchange. Bitcoin also created entire ecosystems of sketchy finance, and its carbon footprint is not-so-quietly doing its part to destroy the planet.
So where is the smart money, and where is the “dumb money” in the long run?
The answer is determined by the number of people who hold assets. That is to say, by the number of people participating in a financial system that allows them some choice as to where to bank, where to live, and what to do with their lives. If that number shrinks too drastically, then money as a concept loses its value.
All that’s left are guns and walls.